With the rate of disruptions and growth, newer financial services firms often find themselves struggling to adapt to the dynamic world of financial services compliance. Even more established firms have challenges keeping up with compliance and cybersecurity changes, which often require deliberate planning and strategy.
The Intersection of Compliance and Technology
Compliance is not a new problem in the world of financial services. Financial institutions, investment advisors, wealth management funds — nearly all financial services organizations are handing the confidential information and transactions of individuals and organizations at scale. While compliance reporting may have been more manual in the past, the extreme complexity of the compliance and security issues facing these firms today makes manual processes technically impossible to maintain.
Shifting the responsibility for compliance, reporting, and security from a process-based solution to lean more heavily on technology isn’t an easy path, but one that mitigates the overarching risk for financial services firms. complex compliance models have been with the support of agencies like the Financial Services Sector Coordinating Council, but applying them is often challenging for many firms to support internally.
Each of the security and compliance requirements put in place by the various regulatory agencies are designed to support the stability of the global economy and protect the privacy rights of consumers. However, abiding by the precise reporting and data management requirements of each entity obligates financial services firms to implement complex frameworks that are costly and time-consuming. Following are a few of the most intensive compliance regulations for the financial services sector:
FINRA
The Financial Industry Regulatory Authority (FINRA) is an independent organization that helps investors and firms by serving as the first line of oversight for the brokerage community. FINRA rules are aimed at ensuring a safe and fair market, with general standards that are continually being updated based on changes to the global marketplace. FINRA regulations are generally focused on complex cybersecurity themes to protect against cyber intrusions, detect compromises to digital systems, and create business continuity and breach plans.
SEC
The SEC, Securities and Exchange Commission, has issued a set of guidelines that dictates how data is stored, accessed, and retrieved. SEC compliance requires organizations to maintain sophisticated record-keeping with two years of transactions stored for immediate retrieval with information and transactions from the prior six years can be stored for non-immediate retrieval.
With intricate audit requirements, duplication, and tracking methods in place, SEC rule 17a-4 can place a burden on internal IT that can be difficult to overcome without external assistance from trusted technology partners. Even with an interpretation document provided by the SEC staff, translating these electronic storage requirements requires significant investment in time and systems.
CIS 20 (Formerly SANS 20)
Provided by the Center for Internet Security (CIS), the CIS 20 controls are a prioritized set of actions that are aimed at reducing overall cybersecurity risk and protecting your financial services organization from known cyberattack vectors. These critical security controls help “bridge the gap between high-level security framework requirements and the operational commands needed to implement them”.
SOX
First passed in 2002, the Sarbanes-Oxley Act (SOX) was established to protect individuals by increasing transparency in the financial services sector and requiring formalized checks and balances for individual entities. In today’s world, SOX compliance is aimed at limiting access to internal systems that contain confidential or financial data. Fortunately, SOX internal controls are also solid business practices that can enhance your firm’s cybersecurity risk profile and reduce the threat of insider attacks.
Understanding the evolving world of IT compliance for financial services firms is an ongoing conversation, not a one-time decision. Learn more about the compliance obstacles facing the financial services sector when you download Coretelligent’s complimentary whitepaper: “How Financial Services Firms Can Manage Compliance“. Coretelligent has years of experience working with financial firms. And has consultants based in Atlanta, Boston, New York, Philadelphia, San Francisco, and more to help your firm manage IT compliance and security.
